The 7300LE uses the 128MB on the graphics board but it will also share part of the system RAM to add extra to it. Since you only have 1GB of RAM in your system and the graphics card is also using 254MB of that, it leaves little for the actual game while it's running. Since you're using Windows Vista (DX10), it'll be even more pronounced because Vista is such a RAM hog.
Not to mention the 7300 isn't a speedy gfx card. I'd recommend getting a bigger vid card or, at least, doubling your RAM.
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